The COVID-19 pandemic has so far infected over 1.2 million people and killed over 60,000 people, and has spread to more than 205 countries. While at some locations a handful of cases were reported, others with early community transmission have a few hundred. Unfortunately, at geographies with widespread transmission have reported thousands of cases.
This pandemic has caused major disruption to global economies owing to the containment measures and lockdowns all over. It is quite evident now that because of the virus-containment measures global economies will be hit to a great extent. Lockdowns, social-distancing and other coronavirus-containment measures have led to a massive fall in the global economic activity – plummeting consumer demand, fall in crude oil prices, crash in global stock markets, and equally decreasing global banking revenues.
The COVID-19 outbreak has had far-reaching implications for almost all possible aspects of the economy. From consumer, retail, manufacturing, entertainment, packaged goods, sports, travel, etc. every sector has been impacted in some or the other way. This pandemic is certainly devastating for many companies, but that’s not same when it comes to Fintech. Though Fintech is feeling the pressure of the increasing crisis, but this crisis is also shining a spotlight on the power of Fintechs.
The coronavirus pandemic could be devastating for many companies, but it’s also shining a spotlight on the power of Fintechs. For Fintech it’s a mixed-bag of challenges and equal or more opportunities. Let’s take a look at the challenges and opportunities for Fintech:
Challenges Facing Fintech
Jolt to Venture Capital Funding – Since, the markets are highly volatile there is limited or minimum scope of fundraising activities as investors and funding groups fall back to more cautious positions. With uncertainty over the pandemic getting over, the only hope is seen only in the medium-term where leaner fundraising Fintechs will excel again.
Conferences and Events cancelled or postponed – To break the chain of transmission of the coronavirus and, almost all events across sectors have either been cancelled or postponed. The cancelled or indefinitely postponed conferences and events are a loss too Fintechs as they help develop new business and strengthen business relationships.
Decrease in payments – Fintechs which handle payments could witness a fall in activity from consumers because of the dwindling economy.
Consumers may be less willing to invest savings – Fintechs with a focus on consumer investments may be impacted by consumer wariness about investing during such a volatile moment. Even those investors lucky enough to be relatively insulated from the economic fallout may choose to put their money in safer options for the time being.
In such a volatile market, the consumer exercises caution which and refrains from making huge investments. This impacts the consumer investments in Fintechs.
Opportunities For Fintech
Modernised workforces are more likely to flourish – Companies sporting higher levels of modernisation and distant workforces are better positioned to not just survive but also to thrive during this difficult moment.
United approach to adopt contactless payment systems – As the world suffers through COVID19 pandemic, people from all corners of the world are finding ways to reduce the use of currency both paper and coins which changes hands many times over (possible for the virus to lurk over the surface). Encouragement from all sectors to call for digital / contactless payment systems will boost the growth of Fintechs.
High chances of reversing rollbacks on regulation – Many countries who have managed to curb the spread of coronavirus are likely to relax regulations on certain industries in order to spur economic recovery. Fintech is one of the industries targeted as part of that recovery program.
Preference to digital systems – Amid lockdowns and self-quarantine period, it has become imperative for banks to incorporate the best of digital solutions. Fintechs are well-positioned to step in to offer solutions to replace legacy systems.